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Will plaintiffs have a leg to stand on?: the Supreme Court considers whether statutory damages constitute Article III standing
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Imagine a situation where a person purchases a $74,999 foreign car without test-driving it first, only to receive it and find that the engine is missing, rendering the car nearly valueless. Now also imagine a person who answers a call on her cell phone, hears a prerecorded message offering her a free vacation package opportunity, and hangs up a few seconds later. Right now, only one of these people can file a suit in federal court but it’s not the guy who bought the car.

The United States Supreme Court heard oral arguments in Spokeo Inc. v. Robins, No. 13-1339 earlier this month, a case with huge implications for Telephone Consumer Protection Act (“TCPA”) actions and other claims based on laws providing for statutory damages. The question before the Court is simple: can Congress give a plaintiff who suffers no concrete harm Article III standing by authorizing a private right of action based on a bare violation of a federal statute that provides for statutory damages, such as the TCPA, Fair Debt Collection Practices Act (“FDCPA”), or Fair Credit Reporting Act (“FCRA”).

By way of background, the plaintiff sued Spokeo, a credit reporting agency, under the FCRA for publishing a report about him with false information. The Act allows consumers to sue for statutory damages - ranging from $100 to $1000 - if a credit reporting agency publishes a false report concerning the consumer. The Ninth Circuit Court of Appeals held that the statutory violation provided the plaintiff with Article III standing. More detailed factual and procedural background to the case is available here. This case is significant beyond the FCRA context in which it arose because the outcome could greatly impact the ability of plaintiffs to sue under laws providing a statutory right to sue - like the TCPA. Indeed, if the Supreme Court reverses, it will be more difficult for plaintiffs to show an injury sufficient to confer Article III standing, which allows a case to proceed in federal court. It is important to note that, while there are several potential conclusions that the Supreme Court could reach, the justices’ questions suggest that it is unlikely that the Court will hold that a statuary violation, alone and without injury, is sufficient for Article III standing. Indeed, only Justices Ginsburg and Sotomayor intimated at such a possibility during oral argument by noting the Court’s history of defining an injury-in-fact as the breach of a legal right.

But that does not mean Spokeo is in the clear for an easy win. The liberal justices seemed to agree that even if a statutory violation alone is not enough for standing, the plaintiff, in fact, did show an injury. Justice Kagan made this point by asking why the dissemination of information about an individual in a credit report is not a concrete injury, noting that, “if somebody did it to me I’d feel harmed. And I think that if you went out on the street and you did a survey, most people would feel harmed.” Justice Breyer followed up by suggesting that there could be “psychic harm” involved in addition to standard economic harm.

But the conservative justices countered that those concerns amounted to little more than speculation and that the plaintiff could not show that anyone other than himself ever saw the report containing the misinformation. But Justice Kagan and the other liberal justices expressed their concern over the inherent difficulty in proving that someone saw the information or proving that it resulted in concrete economic harm. They pointed out that Congress intended to identify misinformation in a credit report as a harm and sought to solve that problem. Justice Scalia and the rest of the conservative bench, however, did not see the statute as identifying misinformation as a specific harm, but, rather viewed it as providing a set of procedures for credit reporting agencies to follow. He noted that the mere violation of those procedures cannot automatically provide standing without a concrete injury. The Court’s ultimate ruling likely will be determined, once again, by Justice Kennedy.

While the Supreme Court’s decision could have a substantial impact on the plaintiffs’ bar’s ability to bring TCPA, FCRA, FDCPA, and similar cases in federal court, it may be that the practical effect of the Court’s ruling will simply be a shift to state court for these types of cases. Only the Court’s decision and time will tell. In the meantime, please see this compiled list of recent TCPA class action complaints filed in federal district court.

Compare jurisdictions: Arbitration

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